New York Law Review

Author: The New York Law Review

  • Plotch v. Citibank, N.A., 26 N.Y.3d 480 (2015): Consolidation Agreements as “First Mortgage of Record” under the Condominium Act

    26 N.Y.3d 480 (2015)

    A consolidation agreement that merges two mortgages into a single lien recorded before a condominium board’s common charges lien qualifies as the “first mortgage of record” under Real Property Law § 339-z, taking priority over the common charges lien.

    Summary

    In Plotch v. Citibank, N.A., the New York Court of Appeals addressed whether a consolidated mortgage, recorded before a condominium board’s lien for unpaid common charges, qualified as the “first mortgage of record” under Real Property Law § 339-z. The court held that the consolidation agreement did qualify, thereby giving the consolidated mortgage priority over the condominium’s lien. The court emphasized that the consolidation created a single mortgage lien, recorded before the condominium’s lien, and that to rule otherwise would undermine the practical realities of refinancing and contradict the intent of the statute.

    Facts

    Citibank extended a mortgage to a condominium unit owner, which was recorded. A year later, a second mortgage was extended, and the two were consolidated into a single mortgage lien. The consolidation agreement was recorded. Seven years later, the condominium board filed a lien for unpaid common charges. The plaintiff purchased the unit in a foreclosure action, subject to the “first Mortgage of record against the premises.” The plaintiff sought a declaration that the second mortgage was subordinate to the condominium board’s lien. Citibank argued the consolidation agreement was the first mortgage of record.

    Procedural History

    The Supreme Court granted Citibank’s motion, declaring the consolidation agreement the first mortgage of record. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether a consolidation agreement that merges two mortgages recorded before a condominium board’s common charges lien qualifies as the “first mortgage of record” under Real Property Law § 339-z.

    Holding

    1. Yes, because the consolidation agreement created a single mortgage lien, recorded before the common charges lien, which takes priority.

    Court’s Reasoning

    The court relied on Real Property Law § 339-z, which grants a condominium board a lien for unpaid common charges that has priority over all other liens except for, among other things, the “first mortgage of record.” The court observed the chronological order of recording generally determines lien priority. The court examined consolidation agreements and determined that they are instruments of convenience and can retain their separate lien status when there is an intervening lien. However, where there is no intervening lien, the consolidation agreement is considered the “first mortgage of record.”

    The court rejected the argument that only the original first mortgage should have priority. The court reasoned that the consolidation created a single mortgage lien, recorded before the condominium’s lien, and therefore took priority. The court also considered the practical implications, noting that a contrary ruling would adversely affect homeowners’ ability to refinance and would lead to unnecessary steps to achieve the same result through satisfying and replacing the original mortgage. The court emphasized that their ruling aligns with the statutory purpose of the Condominium Act, which seeks to stimulate building activity and allow for flexibility in obtaining mortgages.

    Practical Implications

    This case clarifies that a consolidation agreement, recorded before a condominium board’s common charges lien and absent an intervening lien, will be considered the “first mortgage of record,” taking priority over the common charges lien. This has significant implications for lenders, property owners, and condominium boards. Lenders can rely on the priority of their consolidated mortgages, while unit owners can more easily refinance. Condominium boards must recognize this priority when assessing the collectability of their liens. Attorneys handling foreclosure actions or disputes over lien priority must carefully review the recording dates of all relevant instruments, including any consolidation agreements, to determine lien priority.

    Meta Description

    The case establishes that a mortgage consolidation agreement, recorded before a condo association’s lien, maintains priority as the “first mortgage of record” under NY’s Condominium Act, impacting lien priority in foreclosure actions.

    Tags

    Plotch v. Citibank, Court of Appeals, 2015, Real Property, Condominium, Mortgage Consolidation, Lien Priority

  • New York State Public Employees Federation, AFL-CIO v. New York State Racing and Wagering Board, 27 N.Y.3d 502 (2016): Satisfying Duty to Negotiate Through a Side Letter Agreement

    <strong><em>27 N.Y.3d 502 (2016)</em></strong></p>

    A public employer satisfies its duty to negotiate in good faith under the Taylor Law when it has negotiated terms in an agreement that are reasonably clear on the specific subject at issue.

    <p><strong>Summary</strong></p>

    The New York State Racing and Wagering Board reduced per diem wages for seasonal employees. The New York State Public Employees Federation (PEF) filed an improper practice charge, alleging a violation of the Civil Service Law. The issue was whether a side letter agreement between the Racing Board and PEF satisfied the duty to negotiate. The Court of Appeals held that the side letter agreement, which addressed wage limitations, demonstrated that the parties had reached accord, thereby satisfying the duty to negotiate. The court emphasized deference to the Public Employment Relations Board (PERB) and reversed the Appellate Division’s decision, reinstating PERB’s dismissal of the improper practice charge.

    <p><strong>Facts</strong></p>

    PEF represented seasonal track personnel employed by the Racing Board. The Racing Board chair sets the compensation for these employees, subject to the Director of the Budget’s approval. In 1995, PEF and the state entered into a collective bargaining agreement (CBA) with a side letter agreement addressing terms of employment for seasonal employees. The side letter agreement incorporated articles from the CBA and covered compensation, including lump-sum payments and salary increases. In January 1996, the Racing Board reduced per diem pay. PEF filed an improper practice charge with PERB, alleging a violation of the duty to negotiate. PERB dismissed the charge, finding the side letter agreement satisfied the duty to negotiate. The Appellate Division reversed PERB’s decision, but the Court of Appeals ultimately reversed the Appellate Division.

    <p><strong>Procedural History</strong></p>

    PEF filed an improper practice charge with PERB. The Assistant Director of PERB found a violation of the Civil Service Law, but PERB dismissed the charge, finding the duty to negotiate satisfied. The Supreme Court upheld PERB’s decision. The Appellate Division reversed, finding PERB’s determination arbitrary and capricious. The Court of Appeals reversed the Appellate Division and reinstated the Supreme Court’s judgment.

    <p><strong>Issue(s)</strong></p>

    1. Whether PERB’s decision dismissing the improper practice charge was arbitrary and capricious or affected by an error of law.

    <p><strong>Holding</strong></p>

    1. No, because the side letter agreement demonstrated that the parties had reached accord, satisfying the duty to negotiate.

    <p><strong>Court's Reasoning</strong></p>

    The Court of Appeals emphasized that, under Civil Service Law § 209-a (1) (d), the Racing Board has a duty to negotiate in good faith. However, this duty is satisfied when an agreement demonstrates that the parties had reached accord. The court deferred to PERB’s expertise in interpreting collective bargaining agreements. The court found that the side letter agreement addressed limitations on the Director of the Budget’s discretion to set wages. The agreement included specific pay increases and did not rule out pay reductions. The side letter agreement was comprehensive, covering conditions of employment for seasonal employees for 1995 to 1999. The court concluded that PERB’s finding that the parties intended the side letter agreement to act as a negotiated limitation upon the State Budget Director’s discretion was not arbitrary and capricious. The court stated, “Duty satisfaction occurs when a specific subject has been negotiated to fruition and may be established by contractual terms that either expressly or implicitly demonstrate that the parties had reached accord on that specific subject.”

    <p><strong>Practical Implications</strong></p>

    This case emphasizes that public employers can satisfy their duty to negotiate by negotiating comprehensive agreements that address the specific subjects at issue, even if the agreement does not explicitly address every possible scenario. It underscores the importance of drafting collective bargaining agreements with clear language and detailed provisions. The case highlights the deference given to PERB’s interpretation of such agreements. Legal practitioners should be mindful of the potential for duty satisfaction defenses when advising public employers on labor relations. This case confirms the importance of carefully examining all terms in a collective bargaining agreement and any side letters, to assess how the parties intended to limit the budget director’s discretion in determining wages. The decision reinforces the principle that the courts will generally uphold the interpretation of collective bargaining agreements made by the agency with expertise in this area.

  • People v. Caban, 25 N.Y.3d 503 (2015): Ineffective Assistance of Counsel and the Presentation of Expert Testimony

    People v. Caban, 25 N.Y.3d 503 (2015)

    Defense counsel’s strategic decisions regarding the information provided to an expert witness do not constitute ineffective assistance of counsel unless they fall below prevailing professional norms and prejudice the defendant’s case.

    Summary

    The New York Court of Appeals reversed an Appellate Division decision, ruling that defense counsel’s decision to withhold certain information (photographs of the victim’s injuries and the prosecution’s theory of retaliation) from an expert witness did not constitute ineffective assistance of counsel. The court emphasized that such strategic choices are not subject to second-guessing with hindsight. The court found that the defense counsel provided the expert with substantial information and that the withheld information was not critical to the expert’s ability to form an opinion. The court deferred to counsel’s tactical decisions, highlighting the importance of meaningful representation, even if the strategy was not ultimately successful.

    Facts

    A 15-year-old defendant was convicted of attempted murder and assault for repeatedly stabbing a 12-year-old victim. The defense argued justification and lack of intent, claiming that the defendant experienced a psychotic episode. Defense counsel retained a psychiatric expert who testified that the defendant suffered from schizophreniform disorder. The expert was provided with extensive information, including the defendant’s medical and psychiatric records, but was not given photographs of the victim’s wounds or informed of the prosecution’s theory of the motive. The expert acknowledged that this omitted information would be ‘useful and important.’ On cross-examination, the prosecutor highlighted the expert’s lack of knowledge about the victim’s injuries and the alleged ‘snitching’ motive. The jury found the defendant guilty on all counts.

    Procedural History

    The defendant appealed his conviction, arguing ineffective assistance of counsel. The Appellate Division reversed the conviction, holding that the withholding of information from the expert was a strategic decision that allowed the prosecutor to undermine the expert’s testimony. The New York Court of Appeals granted the People leave to appeal.

    Issue(s)

    1. Whether defense counsel provided ineffective assistance of counsel by failing to provide the psychiatric expert with photographs of the victim’s injuries and information about the prosecution’s theory of the case.

    Holding

    1. No, because the strategic decision to withhold information from the expert did not constitute ineffective assistance of counsel.

    Court’s Reasoning

    The court applied the standard for ineffective assistance of counsel, requiring a showing that counsel’s performance fell below an objective standard of reasonableness and that the deficient performance prejudiced the defendant. The court found that counsel’s performance was not deficient. The court deferred to counsel’s strategic choices, noting that hindsight should not dictate trial strategy. The court emphasized that the expert was provided with substantial information, and it was unclear if there was a prevailing norm regarding the information forensic experts require. The court distinguished this case from those where counsel’s performance was deficient because counsel did not investigate the case and failed to prepare witnesses. Furthermore, the court concluded that, as counsel had a legitimate basis for withholding the information (it was potentially inflammatory), the Appellate Division erred by finding ineffective assistance of counsel.

    Practical Implications

    This case provides guidance to defense attorneys about the scope of effective assistance of counsel concerning the preparation of expert witnesses. It underscores the following points:

    • Counsel’s decisions regarding the information provided to an expert are generally considered strategic and are given considerable deference by appellate courts.
    • Counsel is not required to provide an expert with every piece of information that could possibly aid in forming an opinion.
    • The relevant inquiry is whether counsel’s actions fell below an objective standard of reasonableness based on the totality of the circumstances.
    • The attorney must provide a sufficient basis for the expert to form an opinion on the critical issues of the case.
    • Attorneys should document the rationale for strategic choices to justify their decision.

    This case indicates that courts will generally avoid second-guessing attorneys’ tactical decisions, particularly when the record does not show that the failure to provide certain information to an expert fell below accepted professional standards. Attorneys should be aware that they must still prepare an expert witness adequately to assist in the defense of the case.

  • Friends of Thayer Lake LLC v. Brown, 28 N.Y.3d 1041 (2016): Navigability-in-Fact and the Requirements for Summary Judgment

    <strong><em>Friends of Thayer Lake LLC v. Brown</em></strong>, 28 N.Y.3d 1041 (2016)

    A determination of a waterway’s navigability-in-fact is fact-intensive and not always resolvable as a matter of law, particularly when conflicting evidence on material facts exists, thus precluding summary judgment.

    <strong>Summary</strong>

    The New York Court of Appeals addressed whether the Mud Pond Waterway was navigable-in-fact, and thus open to public use. Both parties requested summary judgment, presenting conflicting evidence on the waterway’s historical and prospective use. The court held that summary judgment was inappropriate because the determination of navigability is fact-intensive and the record contained conflicting evidence on material facts such as historical use, ease of passage, and potential commercial utility. The court emphasized that the trier of fact must weigh the evidence and assess witness credibility to determine if the waterway is navigable. The order of the Appellate Division was modified, denying defendants’ motions for summary judgment.

    <strong>Facts</strong>

    Plaintiffs own property in the Adirondack Mountains, adjacent to the William C. Whitney Wilderness Area. The Mud Pond Waterway, within the Wilderness Area, crosses plaintiffs’ property. The New York State Department of Environmental Conservation constructed a carry trail to bypass the Waterway. Defendants claimed the Waterway was navigable-in-fact, making it open to public use. The parties submitted extensive evidence including documents, maps, and videos. They sought a determination of navigability as a matter of law.

    <strong>Procedural History</strong>

    The Supreme Court expressed reluctance to grant summary judgment, citing the need for factual findings. The Appellate Division granted the parties’ mutual request to resolve the matter as a question of law. The Court of Appeals reviewed the Appellate Division’s decision granting summary judgment based on the parties’ mutual request.

    <strong>Issue(s)</strong>

    1. Whether the Mud Pond Waterway is navigable-in-fact and open to public use.

    2. Whether summary judgment was appropriately granted given the nature of the evidence presented and the factual disputes.

    <strong>Holding</strong>

    1. The Court did not answer the question of navigability in fact.

    2. No, because material questions of fact remained and precluded the granting of summary judgment.

    <strong>Court's Reasoning</strong>

    The court reiterated that a waterway is navigable-in-fact if it provides practical utility as a means of transportation. The court referenced prior precedent holding that recreational use is a proper part of the navigability analysis. The court highlighted that the parties presented conflicting evidence on material facts concerning the waterway’s historical and potential commercial utility and public use. The court underscored that summary judgment is inappropriate when material issues of fact are in dispute or multiple conclusions could be drawn from established facts. The court emphasized that determinations of navigability are highly fact-specific and that such factual disputes must be resolved by the trier of fact after weighing evidence and assessing credibility.

    "On this record, we must decline the parties’ invitation to award judgment as a matter of law. … As material questions of fact remain, neither party has demonstrated prima facie entitlement to summary judgment, and the competing evidence must be weighed and the credibility of the witnesses must be assessed by a factfinder."

    <strong>Practical Implications</strong>

    This case emphasizes the importance of a thorough factual record when seeking summary judgment, especially in cases involving fact-intensive determinations like navigability. It highlights the limits on a court’s ability to resolve complex factual disputes as a matter of law, even when both parties request it. Attorneys should be cautious about seeking summary judgment when material facts are disputed. The case instructs that factual disputes should be resolved by the trier of fact after weighing the evidence and assessing witness credibility. This case provides guidance on how courts will determine the validity of public access to waterways and the evidentiary burden in such cases.

  • People v. Harrison, 39 N.Y.3d 281 (2023): Deportation and the Availability of Appellate Review

    39 N.Y.3d 281 (2023)

    Deportation does not automatically render an appeal moot, and an appellate court may not dismiss an appeal solely because the defendant has been deported, particularly when the deportation is a consequence of the conviction being appealed.

    Summary

    In People v. Harrison, the New York Court of Appeals considered whether a deported defendant could pursue an appeal related to his criminal conviction. The court affirmed the dismissal of the appeal, holding that although deportation does not automatically mean an appeal is moot, the appellate division did not abuse its discretion in dismissing the appeal. The case addressed the interplay between a defendant’s right to appeal, deportation, and the availability of appellate review, particularly when the defendant’s claim is based on ineffective assistance of counsel. The Court distinguished between cases where defendants seek direct appeals and those where they pursue collateral review, as well as the impact of waiver of appeal on the ability to seek appellate review.

    Facts

    The defendant, Harrison, pleaded guilty to a crime. He subsequently filed a motion to vacate his guilty plea, arguing that his counsel provided ineffective assistance by failing to advise him properly about the immigration consequences of the plea. While his motion was pending, Harrison was deported. The Appellate Division dismissed his appeal from the denial of his CPL 440.10 motion, finding the appeal moot due to his deportation. The Court of Appeals considered whether the appellate court’s dismissal was proper.

    Procedural History

    Harrison was convicted upon a guilty plea. He moved to vacate the judgment, arguing ineffective assistance of counsel. The trial court denied the motion. Harrison appealed to the Appellate Division, which dismissed his appeal, finding it moot. The New York Court of Appeals heard the case on appeal from the Appellate Division.

    Issue(s)

    1. Whether the Appellate Division erred in dismissing the defendant’s appeal as moot due to his deportation.

    2. Whether the rule in People v. Ventura, which prohibits dismissal solely because of deportation, applies to appeals from denials of CPL 440.10 motions.

    Holding

    1. No, because the Appellate Division did not abuse its discretion when dismissing the appeal.

    2. No, because the rule in People v. Ventura does not apply to appeals from denials of CPL 440.10 motions.

    Court’s Reasoning

    The Court of Appeals acknowledged that deportation alone does not necessarily render an appeal moot. The court reasoned that when considering a direct appeal, or an appeal following denial of a CPL 440.10 motion, the appellate court had the discretion to determine whether to hear the appeal or dismiss it as moot. The court distinguished this case from People v. Ventura, where the issue was a direct appeal of a conviction. The Court also distinguished the current case from the case of People v. Diaz, where an appellate court had dismissed the appeal after the defendant absconded and was deported. The court emphasized that the defendant sought discretionary appeal of the denial of a motion to vacate his plea, rather than a direct appeal. The court also considered that the defendant had not been denied review and that the appellate division could decide to dismiss the appeal for any number of reasons.

    The Court stated, “[D]ismissal of a direct appeal is not foreclosed when a defendant is deported, and the appellate court is unable to fashion a meaningful remedy.” The court went on to say that the dismissal of the appeal by the Appellate Division was proper because the court found that the appellate court did not abuse its discretion in dismissing the appeal.

    The dissenting opinion by Judge Rivera argued the dismissal of the appeal in this case was inconsistent with prior precedent, specifically People v. Ventura, because the defendant was involuntarily deported and was seeking judicial review to challenge the conviction that resulted in his deportation. According to the dissent, the majority’s decision ignored the “tremendous ramifications of deportation” and the need for intermediate appellate review.

    Practical Implications

    This decision clarifies the circumstances under which appellate review is available to a defendant who has been deported. The case provides a framework for analyzing appeals in cases involving deportation and challenges to guilty pleas. The ruling makes clear that appellate courts have discretion in these cases, distinguishing between direct appeals and those following a collateral challenge. The Court’s decision highlights the significance of the procedural posture of the appeal (direct appeal versus CPL 440.10 motion) when assessing the impact of deportation on the availability of appellate review. This case will guide appellate practice in similar cases, and it reinforces that while deportation is a factor to consider, it does not automatically prevent appellate review. This case is distinguished from Ventura and Diaz.

  • Erie County Employees Retirement System v. Blitzer, 28 N.Y.3d 268 (2016): Applying the Business Judgment Rule in Going-Private Mergers with Protective Conditions

    Erie County Employees Retirement System v. Blitzer, 28 N.Y.3d 268 (2016)

    In reviewing going-private mergers, the business judgment rule applies if the merger is conditioned from the outset on approval by both a special committee of independent directors and an uncoerced majority of the minority shareholders; otherwise, the entire fairness standard applies.

    Summary

    The New York Court of Appeals addressed the standard of review for going-private mergers. The court adopted the Delaware Supreme Court’s framework from MFW, holding that the business judgment rule applies if the merger is conditioned on approval by an independent special committee and an uncoerced majority of the minority shareholders. If these conditions aren’t met, the entire fairness standard is applied, placing the burden on the directors to show fair process and fair price. The court affirmed the dismissal of the plaintiff’s complaint, finding the conditions for the business judgment rule were met.

    Facts

    Kenneth Cole Productions (KCP) had two classes of stock, with Kenneth Cole holding the majority voting power. Cole proposed a going-private merger, offering to buy the remaining Class A shares. The KCP board formed a special committee to negotiate the terms. Cole’s offer was conditioned on approval by the special committee and a majority of the minority shareholders. The special committee negotiated the price, eventually recommending $15.25 per share, which the minority shareholders approved with 99.8% in favor. Shareholders sued, alleging breach of fiduciary duty.

    Procedural History

    Shareholders filed class actions in the trial court. The trial court granted the defendants’ motions to dismiss, finding no breach of fiduciary duty. The Appellate Division affirmed, holding that the entire fairness standard did not apply. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the entire fairness standard should apply to the going-private merger.

    2. Whether the business judgment rule should apply to the going-private merger.

    Holding

    1. No, because the court adopted the Delaware Supreme Court’s framework in MFW, which outlines the conditions for the business judgement rule.

    2. Yes, because the conditions for the business judgement rule, as outlined in MFW, were met.

    Court’s Reasoning

    The court reviewed the history of freeze-out mergers and the standards of review applied, noting the inherent conflict of interest when a controlling shareholder seeks to take a company private. The court discussed the business judgment rule, which generally defers to directors’ decisions absent fraud or bad faith. The court specifically adopted the standard from MFW (Kahn v. M&F Worldwide Corp.), which states that the business judgment rule applies if the merger is conditioned from the outset on approval by both an independent special committee and an uncoerced majority of the minority shareholders. The court reasoned that this structure creates a situation akin to an arm’s-length transaction, protecting minority shareholders while respecting the board’s decisions. The court examined the facts under the MFW standard and found the complaint did not adequately allege that any of the six conditions were absent. The court emphasized the plaintiff’s failure to show that the special committee was not independent, lacked the ability to negotiate a fair price, or that the minority shareholders were coerced.

    Practical Implications

    This decision provides a clear framework for evaluating going-private mergers, which can provide more predictability to parties involved in these transactions. It confirms that, if structured correctly, these mergers can be reviewed under the business judgment rule. This means that if a merger satisfies the conditions set forth in MFW (an independent special committee, the committee is empowered to freely select its own advisors and to say no definitively, and an informed, uncoerced majority of the minority vote), courts will defer to the board’s decision, reducing the risk of shareholder litigation. Companies engaging in going-private mergers should carefully structure the process to meet these conditions. Plaintiff’s attorneys must allege specific facts to show any of the conditions were not met to avoid dismissal.

  • Matter of Highbridge Broadway, LLC v. Assessor of the City of Schenectady, 28 N.Y.3d 450 (2016): Effect of a Single Tax Certiorari Petition on Subsequent Years’ Exemptions

    28 N.Y.3d 450 (2016)

    A single tax certiorari petition challenging a business investment exemption under RPTL 485-b is sufficient to compel a school district to refund taxes based on an improper exemption calculation for all years pending judicial determination, even if the taxpayer did not file separate petitions for each year.

    Summary

    This case addressed whether a property owner who successfully challenged the calculation of a real property tax exemption in one year must file separate tax certiorari petitions for subsequent years to receive a refund. The New York Court of Appeals held that a single petition is sufficient. The court reasoned that because the exemption calculation was based on a fixed formula, and the underlying issue was the same for each year, requiring multiple petitions would be redundant and inefficient. This decision clarifies the procedural requirements for challenging tax assessments and exemptions, providing relief to property owners. The dissenting opinion argued against this decision, stating that the taxpayer must bring annual proceedings to preserve the right to a refund.

    Facts

    Highbridge Broadway, LLC (petitioner) received a partial tax exemption under RPTL 485-b. Petitioner filed a tax certiorari petition challenging the 2008 assessment. The petitioner claimed that the Assessor had incorrectly calculated the exemption. The Supreme Court granted the petitioner’s motion for summary judgment, holding that the Assessor had incorrectly calculated the exemption. The school district, which was notified of the proceeding, refused the petitioner’s demands for a refund for tax years subsequent to 2008, arguing that the petitioner had not filed separate petitions for those years. The Appellate Division vacated the trial court’s order for the school district to issue refunds, holding that the petitioner was required to file annual challenges to preserve its right to relief. The Court of Appeals reversed the Appellate Division.

    Procedural History

    The petitioner filed a petition in Supreme Court challenging the 2008 assessment and exemption calculation. Supreme Court granted summary judgment to the petitioner. The Appellate Division modified the Supreme Court’s order, ruling that the school district was not required to issue refunds for years subsequent to 2008 because the petitioner had not filed separate petitions for those years. The Court of Appeals reversed the Appellate Division’s decision.

    Issue(s)

    1. Whether a single tax certiorari petition challenging a business investment exemption under RPTL 485-b is sufficient to compel a school district to refund taxes based on an improper exemption calculation for all years pending judicial determination?

    Holding

    1. Yes, because the plain language of RPTL 485-b does not require separate petitions, and the underlying issue of the exemption calculation was the same for each year.

    Court’s Reasoning

    The court analyzed the plain language of RPTL 485-b, which provides for a single application for the exemption, and the fact that the exemption calculation was based on a formula tied to the original assessment. Because the root issue, the improper calculation of the exemption, was consistent across all years, the Court found that filing additional petitions would be redundant. The court stated, “to require the taxpayer to file a new petition for each year in which the exemption is improperly calculated would serve no practical purpose.” The court emphasized that the purpose of the proceeding was to correct an error that affected multiple years, and that requiring separate petitions would impose an unnecessary burden on the taxpayer. The court found no statutory language or compelling policy reason to require the property owner to file multiple petitions.

    Practical Implications

    This decision simplifies the process for property owners challenging real property tax exemptions, particularly those calculated using a fixed formula. It clarifies that a single petition can cover multiple years if the underlying issue is the same. This ruling benefits taxpayers by reducing the procedural burden and cost associated with tax challenges. Attorneys handling similar cases should advise clients that a single, well-drafted petition can preserve their rights to refunds for multiple years, streamlining litigation and minimizing costs. This may also impact local governments by clarifying their obligations to provide refunds when exemptions are improperly calculated. Later cases may cite this decision when considering the procedural requirements for challenging tax assessments and the scope of a single petition’s effect.

  • Millennium Holdings LLC v. Glidden Co., 30 N.Y.3d 409 (2017): Antisubrogation Rule Does Not Apply Where Party Sued by Insurer Was Not an Insured

    <strong><em>Millennium Holdings LLC v. Glidden Co.</em>, 30 N.Y.3d 409 (2017)</em></strong>

    The antisubrogation rule, which prevents an insurer from subrogating against its own insured, does not apply where the party against whom the insurer seeks subrogation was not an insured under the relevant insurance policy.

    <strong>Summary</strong>

    In a dispute over indemnification obligations stemming from lead paint lawsuits, several insurers sought to subrogate against Akzo Nobel Paints (ANP) for payments made to Millennium Holdings LLC, the insurers’ insured. The New York Court of Appeals held that the antisubrogation rule did not bar the insurers’ claims because ANP was not an insured under the policies in question. The court clarified that the antisubrogation rule applies when the party against whom subrogation is sought is covered by the insurance policy. Since ANP was not covered, the insurers could pursue their subrogation claims based on contractual and equitable grounds. This decision reaffirms the fundamental requirement that the party against whom subrogation is sought must be an insured under the policy for the antisubrogation rule to apply.

    <strong>Facts</strong>

    The Glidden Company manufactured lead paint and was later acquired by SCM Corporation. SCM had insurance policies with various insurers. SCM’s assets and liabilities, including the Glidden paints business, were later distributed to HSCM-6 and HSCM-20 as part of SCM’s liquidation. HSCM-20 entered into a purchase agreement, selling HSCM-6 to ICI American Holdings, but retained the insurance policies. This agreement included indemnification obligations related to product liability claims. A series of lead paint lawsuits were filed against predecessors of Millennium and ANP. The insurers paid settlements on behalf of Millennium. Millennium sought indemnification from ANP. The insurers intervened, seeking to subrogate against ANP, but ANP argued that the antisubrogation rule barred the claims.

    <strong>Procedural History</strong>

    The insurers filed a motion to intervene in the action, which was granted. They then filed a second amended complaint to seek subrogation. The trial court granted ANP’s motion for summary judgment, holding that the antisubrogation rule barred the insurers’ subrogation claims. The Appellate Division affirmed. The Court of Appeals reversed.

    <strong>Issue(s)</strong>

    1. Whether the antisubrogation rule prevents the insurers from subrogating against ANP, a party not insured under the policies, for payments made on behalf of Millennium, the insurers’ insured.

    <strong>Holding</strong>

    1. No, because ANP was not an insured under the relevant policies, the antisubrogation rule does not apply.

    <strong>Court's Reasoning</strong>

    The court emphasized that the antisubrogation rule is an exception to the right of subrogation. The purpose of the rule is to prevent an insurer from suing its own insured for a claim arising from the risk covered by the policy and to avoid a conflict of interest where an insurer might favor one insured over another. The court stated that the essential element of the antisubrogation rule is that the party against whom the insurer seeks to subrogate must be covered by the insurance policy. In this case, ANP and its predecessors were not insured under the policies in question because the policies were explicitly excluded from the distribution of assets to ANP’s predecessor. The court distinguished this case from *Jefferson Ins. Co. of N.Y. v. Travelers Indent. Co.*, where the antisubrogation rule applied because the permissive user was covered by the policy.

    The court noted: “If we were to extend application of the antisubrogation rule to all non-covered third parties, an insurer who fulfills its obligation to pay on the risks insured by the relevant policy would essentially be foreclosed from the ability to subrogate.”

    <strong>Practical Implications</strong>

    This case clarifies the scope of the antisubrogation rule in New York. It confirms that an insurer can pursue subrogation against a third party that is not an insured under the policy, even if the third party has an indemnification agreement with the insured. This decision informs how insurers analyze whether they have subrogation rights. It also provides guidance on the specific factual circumstances needed for the antisubrogation rule to apply. Law firms handling insurance litigation should carefully examine the insurance policy and determine whether the third party is an insured under the policy, even if the third party may have an indemnification relationship with the insured. Later cases will likely cite this decision to clarify that the rule against subrogation does not apply where the third party is not covered by the policy.

  • Gordon v. Google, Inc., 26 N.Y.3d 350 (2015): Opt-Out Rights in Class Action Settlements Affecting Out-of-State Plaintiffs

    <strong><em>Gordon v. Google, Inc.</em>, 26 N.Y.3d 350 (2015)</em></strong>

    A class action settlement that releases out-of-state class members’ individual damage claims related to a merger requires an opt-out provision, even if the primary relief sought was equitable, to protect due process rights.

    <strong>Summary</strong>

    In this case, On2 Technologies, Inc. shareholders initiated a class action in New York State after Google acquired On2. The plaintiffs sought mainly equitable relief related to the merger. The parties reached a settlement that, without an opt-out provision, would release all merger-related claims. The New York Court of Appeals held that the settlement could not extinguish the rights of out-of-state class members to pursue individual damage claims because due process requires an opt-out option when a settlement involves the release of individual damage claims, regardless of the primary nature of the original complaint. This decision reaffirmed the precedent set in <em>Matter of Colt Indus. Shareholder Litig.</em>, emphasizing the protection of out-of-state class members’ rights.

    <strong>Facts</strong>

    Google and On2 Technologies, Inc. merged. A shareholder filed a class action in New York, alleging breach of fiduciary duty and seeking primarily equitable relief. Other similar actions were filed in Delaware. The plaintiffs in the New York and Delaware actions agreed to settle all claims related to the merger, which included dismissing the actions and releasing all claims with prejudice, but without providing an opt-out right for class members. Over 200 shareholders filed objections to the settlement, arguing that the lack of an opt-out right deprived out-of-state shareholders of their ability to pursue claims. The trial court found the settlement to be fair but refused to approve it because it did not afford out-of-state class members the opportunity to opt out.

    <strong>Procedural History</strong>

    A shareholder initiated a class action in New York State Supreme Court. The Supreme Court preliminarily certified the proposed settlement class but refused to approve the settlement due to the lack of an opt-out provision. The Appellate Division affirmed, with one justice dissenting. The New York Court of Appeals then affirmed the Appellate Division, answering the certified question in the affirmative.

    <strong>Issue(s)</strong>

    1. Whether a class action settlement that releases all merger-related claims, including potential damage claims, without providing an opt-out right, is permissible when the class includes out-of-state members?

    <strong>Holding</strong>

    1. No, because the settlement would deprive out-of-state class members of a cognizable property interest. The court held that the settlement could not extinguish the rights of out-of-state class members to pursue individual damage claims without an opt-out provision.

    <strong>Court’s Reasoning</strong>

    The court relied on the precedent set in <em>Matter of Colt Indus. Shareholder Litig.</em> and <em>Phillips Petroleum Co. v Shutts</em>. The court emphasized that, even if the original complaint sought primarily equitable relief, the proposed settlement’s broad release of all claims, including potential damage claims, triggered the need for an opt-out provision for out-of-state class members. The court reasoned that such a release would extinguish constitutionally protected property rights. The Court of Appeals distinguished <em>Wal-Mart Stores, Inc. v. Dukes</em>, which focused on federal class action rules, because this case was brought under New York law which allows the court discretion to permit a class member to opt out of a class.

    <strong>Practical Implications</strong>

    This decision reinforces the importance of opt-out provisions in class action settlements that affect out-of-state class members and release potential damage claims, regardless of the primary nature of the initial claims. This ruling necessitates careful drafting of settlement agreements in cases involving a mix of equitable and monetary relief, specifically ensuring compliance with due process and protecting the rights of non-resident class members to pursue their own actions. This case illustrates how courts will scrutinize the effects of settlements and will prioritize due process to ensure that class members have the option to pursue individual claims. Attorneys should assess settlements for the potential impact on out-of-state class members and make sure that the settlement provides for an opt-out option if any release of individual damage claims is included.

  • Viking Pump, Inc. v. Century Indem. Co., 26 N.Y.3d 205 (2015): Determining Insurance Coverage in Long-Tail Claims with Non-Cumulation Provisions

    26 N.Y.3d 205 (2015)

    When insurance policies contain non-cumulation clauses, the court will use an “all sums” allocation method and vertical exhaustion to determine the extent of coverage for long-tail claims, where the injury or damage develops over multiple policy periods.

    Summary

    This case involved a dispute over insurance coverage for asbestos-related claims. The court addressed two certified questions: the proper method of allocating liability (all sums versus pro rata) and whether horizontal or vertical exhaustion applies. The court held that the all sums method of allocation, combined with vertical exhaustion, was appropriate due to the presence of non-cumulation and prior insurance provisions in the policies. The court emphasized the importance of contract language in determining insurance coverage and found that these clauses indicated an intent to cover the entire loss, subject to the policy limits, rather than a pro-rata allocation based on the policy periods.

    Facts

    Viking Pump, Inc., and Warren Pumps, LLC, faced asbestos exposure claims stemming from their acquisitions of pump manufacturing businesses. Houdaille Industries, Inc. had extensive insurance coverage, including primary, umbrella, and excess policies. These policies included non-cumulation and prior insurance provisions. The core dispute centered on how to allocate liability among the triggered policies, particularly those provided by the Excess Insurers after the exhaustion of the Liberty Mutual coverage.

    Procedural History

    The case originated in the Delaware Court of Chancery, which ruled on the applicability of New York law. The Court granted summary judgment to Viking and Warren on coverage and allocation issues. This was then transferred to the Delaware Superior Court, which largely sided with the Insureds. The Delaware Supreme Court certified questions to the New York Court of Appeals. These questions concerned allocation and exhaustion methods given specific policy language.

    Issue(s)

    1. Whether, under New York law, the proper method of allocation is “all sums” or “pro rata” when insurance policies contain non-cumulation and prior insurance provisions?

    2. Given the answer to Question 1, whether, under New York law, vertical or horizontal exhaustion is required when accessing excess insurance policies?

    Holding

    1. Yes, because the policy language indicated the court should use an “all sums” allocation method.

    2. Yes, because the court held that vertical exhaustion was appropriate.

    Court’s Reasoning

    The court began by emphasizing that insurance contract interpretation depends on the plain language of the policies. The presence of non-cumulation clauses, which prevent the “stacking” of coverage from multiple policy periods for the same occurrence, strongly favored an “all sums” allocation. The court noted that these clauses were inconsistent with a pro-rata approach, which would divide the loss across multiple periods, because they acknowledged multiple policies could respond to a single loss. The court referenced the “other insurance” clauses and found that vertical exhaustion was consistent with the policy language, which hinged on the exhaustion of the underlying policies within the same policy period. The court distinguished the case from the Second Circuit’s approach in *Olin Corp. v American Home Assur. Co.*, indicating the prior court decisions did not account for the non-cumulation clause present here.

    Practical Implications

    This case significantly clarifies how New York courts will interpret insurance policies with non-cumulation clauses in long-tail claims. Attorneys should: (1) Focus on the specific wording of non-cumulation and prior insurance provisions in the policies to determine the appropriate allocation method; (2) Anticipate that the court will likely apply an “all sums” approach and vertical exhaustion, where these types of clauses are present; (3) Recognize that the court will prioritize the policy language and avoid interpretations that render any part of the policy ineffective.